SMU Community Chat: CRU's Josh Spoores looks out over the Trump 2.0 battlefield

On Wednesday, SMU Editor-in-Chief Michael Cowden got to sit down with CRU Principal Analyst Josh Spoores for a Community Chat. In a far-ranging talk, they talked about everything tariff, and even the USS/Nippon deal got a mention.

Most of the chat was spent fielding questions from the audience, and there were A LOT of questions. We got to about 30 of them and yet there were still over 20 in the queue that we didn’t have time for. While it’s impossible to give ample space to all that was covered, we can provide a few juicy tidbits. We hope they inspire those of you who didn’t get to see the whole talk to view it here.

If there was one overarching theme to the talk, Spoores said that 2025 would be a “chaotic return to volatility.” The doldrums experienced in 2024 are clearly behind us.

Additional capacity in 2025 and beyond

Something Spoores highlighted for 2025 is additional capacity coming online. He pointed out that “2025 is really split between Steel Dynamics Inc. continuing to run as strong as they have been the last couple of months,” as well as U.S. Steel’s Big River 2 mill in Osceola, Ark.

“So overall, for this year, I think we’re expecting 2.4 million metric tons of new flow sheet capacity in the market. And then there’s another 1.7 coming on next year. That’s the rest of Big River Steel,” Spoores said.

He added that it’s expected that “about 4 million tons of coated capacity over the next few years as well” will come online. SMU tracks some of that here in our new galvanizing capacity table.

In his presentation, Spoores provided the slide below showing the new capacity coming online through 2028.

(For more analysis like this, visit www.crugroup.com.)

Tariffs, tariffs, tariffs

Obviously, new capacity coming online in a higher price environment is great for the mills. This week, we saw a huge jump in steel prices on the back of all of President Trump’s tariff announcements.

Spoores notes that looking at the chart above for 2025, if “you want to understand who some of the winners are with tariffs, I think that chart tells you exactly who that is when we get into that as we move along.”

On the subject of tariffs broadly, Spoores said, “I think with Trump, everything’s a negotiation. He’s building leverage. He’s using leverage, even with Ukraine.”

Regarding steel right now, Spoores said, “We’re having the immediate repricing of supply, which should go fast. I think mills are being nice to customers by raising it slowly for that.”

And as to what could be different from 2018, one question dealt with comparisons of Trump’s proposed tariffs with the Hawley-Smoot Tariff Act of 1930. Recall that many believe this contributed to the depths of the Great Depression in the 1930s.

Spoores didn’t shrug it off: “Yes, they’re valid,” he said.

Specifically, he compared it to Trump’s proposed 25% blanket tariffs on imports from Mexico and Canada, which got a 30-day reprieve earlier this month.

Spoores said that if this were to come about, “It’s, for sure, a recession, and it probably would start with a “D” instead because you can’t put a 25% tariff on a vehicle” without severe consequences for the economy.

“Can you put a 25% tariff on a rail car? No, you can’t do that. It’s just awful,” Spoores said. “You put it on avocados, however, not a big deal.”

Spoores quipped that with the current egg woes in the US, “Maybe you could carve out an exclusion for eggs?”

“You know, I heard eggs in Canada are like a third of the price in the US,” he said. “So maybe, maybe there’s some trade out there that can help us.”

USS/Nippon deal

Someone asked about one of the big issues of 2024, actually December 2023, that’s still with us: The USS/Nippon deal.

Recall that, although President Biden officially blocked the deal before leaving office, the companies have until June to unwind the deal. And both companies have signaled they would still like the $14.9-billion deal to go through.

“You know, at this point? I mean, they’ve got those couple of lawsuits going. So it’s gonna be interesting to see where they go. I think they have a strong case,” Spoores said.

USS/Nippon filed two lawsuits, one against the US government, and the other against the heads of Cleveland-Cliffs and the United Steelworkers, Lourenco Goncalves and David McCalll, respectively.

Spoores said, “I think Nippon has a great bargain if they buy it because U.S Steel is going see their EBIDTA jump much faster than what their prices are jumping.”

He added that even if U.S. Steel remains a solo company, “they’re going to be doing great whether there’s activist investors that get involved or not.” (See Laura Miller’s story on this here.)

Spoores laughed and said: “You could put me in charge and grow it. It doesn’t matter who’s in charge at this point because the prices are driving it right now.”

Upcoming Community Chat

Join SMU and the Association of Women in the Metal Industries (AWMI) Pittsburgh Chapter as we discuss what some of these big-picture issues mean for the market and your business.

We’ll be discussing steel AND aluminum. SMU Editor-in-Chief Michael Cowden will be joined by Senior Editor Gabriella Vagnini and Senior Consultant Greg Wittbecker.

The webinar is on Wednesday, Feb. 26, at 11 am ET. You can learn more and register here.